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Potential Microsoft-Yammer impact June 25, 2012

Posted by David Card in Uncategorized.
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There’s still no official declaration by Microsoft – or Yammer – that it would acquire the social work media company for over $1 billion. While some observers labeled the social enterprise acquisition frenzy “lunacy,” others called this potential match-up the “smartest deal of the year.” As with all acquisitions and mergers, it’s all in the details of execution, but this potential combination makes a lot of sense.

What it means

Microsoft’s own SharePoint enterprise collaboration platform is notoriously difficult to deploy. Yammer is just the opposite. And Yammer, like several other freemium, cloud-based collaboration tools, has built integration hooks into its activity stream to pull from and feed back into Microsoft applications, as well as those of Salesforce.com, SAP and other enterprise software offerings. Yammer offers social network-like work media functions including user profiles, project and user “following,” a feed-based user interface, and basic content and file sharing. Yammer, having raised $142 million, claims to have 5 million users at over 200,000 companies, although likely 20 percent or fewer are paid seats.

If the deal goes through, there will be lots of talk of integration. But this is one case where a “bolted on” solution might pay off better for Microsoft than slowing down Yammer’s so-far successful strategy of plugging in to multiple other applications and platforms, including Microsoft’s. And when Microsoft talks integration, it doesn’t necessarily move swiftly. Microsoft spoke warmly about opportunities to connect its Lync unified communications scheme with Skype, with little to show for it so far. A longer-term integration differentiator could lie in searching and connecting the new data silos being created by the proliferation of work media applications.

And which Microsoft product set would benefit most from Yammer integration? SharePoint is the most logical starting point, but Microsoft’s Dynamics CRM suite beckons as does Office and its cloud-based Office 365 variant. Microsoft has been most successful when it builds out horizontal platforms like Windows, Office and SQL Server that third-party developers can leverage for functional (CRM, accounting, HR, manufacturing, etc.) or industry-specific applications. By that reasoning, Yammer fits SharePoint better than Dynamics.

A horizontal approach would keep the door wide open for developers, systems integrators and distributors to take the Yammer/Microsoft combination far and wide. Though some observers think Microsoft will kill Yammer’s freemium business model, it would be wiser to maintain a free entrée point. Microsoft needs to figure out how to exploit this model; freemium is here to stay.

Whom it affects

There is a wide variety – not to say confusing proliferation – of social enterprise players in the market. They tend to fall into types:

Enterprise social networks. Yammer sees companies like Jive Software and Telligent as its main competitors. Those two are ahead of Yammer in adding features and applications to customized their offerings for community marketing, internal and external collaboration and some of those business functions mentioned above. Another player, Atlassian has focused smartly as a platform for software developer collaboration. While Microsoft would add resources to Yammer, those companies are better positioned to compete than is NewsGator, whose current business model depends on adding services to SharePoint.

File-sharing content management and collaboration. Companies like Alfresco and Box have built out far more content management features compared with Dropbox and others that have yet to move far beyond file-sharing. Still, simple collaboration tools have managed to gain ground with line-of-business managers that can’t wait for IT support. If Microsoft doesn’t wreck Yammer, it may be able to wall off enterprise incursions by these companies, and relegate them to small-business and midmarket buyers.

Socialized ERP. Salesforce.com’s Chatter looks a lot like Yammer, and Salesforce can position itself as a credible cloud solution compared with Microsoft. Microsoft must keep Yammer as a horizontal platform play, and resist too much of its own – rather than third-party – application integration. Ironically, Microsoft could play the “open systems” ecosystem card against Salesforce and Oracle’s Webcenter. Oracle pitches Webcenter across all its software, but it’s really its applications-focused cloud computing tactic versus Salesforce.

Socialized enterprise software infrastructure. IBM Connections add social integration to its infrastructure and communications software, much as Tibco employs tibbr. They’re “bolting on” social media to their own offerings, where VMWare is trying to build out a platform with Socialcast. Socialcast, as the more general-purpose offering, is more vulnerable to the Microsoft/Yammer potential.

Key takeaway

Microsoft should focus on keeping Yammer a horizontal platform and learn how to adapt to freemium pricing rather than obsess over deeply integrating Yammer across its product lines. If it does, this could be a powerful combination in work media.

Question of the week

Who’s most at risk from a Microsoft/Yammer combination?

Startup action in social media marketing June 11, 2012

Posted by David Card in Uncategorized.
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Even after Facebook’s IPO “disappointment,” there was a lot of action around social media marketing startups last week. Perhaps it’s because the industry recognizes that the challenges in monetizing Facebook and other social media present big opportunities for companies that can help. Salesforce.com bought Buddy Media for nearly $700 million and Oracle announced it would buy its second company in two weeks. At the same time, two social media marketing companies – Shoutlet and Unified Social – raised about $15 million apiece.

While these transactions are riding the same uber-trend, it’s too simple to just say: “social media marketing technology is hot,” or “get ready for market consolidation.” In the overall social media marketing ecosystem, some combinations make more sense than others.

Who buys social CRM?

The big guys are buying technology and services companies to roll up into social CRM offerings. But most of them have little experience selling to advertisers or publishers, two big constituencies in in the social marketing ecosystem. Gartner says that by 2017 CMOs will spend more money on technology than CIOs. That seems like a stretch, even to a social media analyst like myself. But reports of billion-dollar ad sales for Twitter seem aggressive, too. Regardless of the final total, marketing-technology spending is a potential new growth area for enterprise software companies.

Larry Ellison claims Oracle took a look at Buddy Media, but got the company it wanted when it announced it would purchase Vitrue. Both companies offer technologies and services that help advertisers and marketers manage social media campaigns on Facebook, Twitter and across the web. Last week Oracle added to its portfolio Collective Intellect, which makes semantic analysis software it says works faster and cheaper than natural language analysis. Oracle is fleshing out its SaaS offerings with technologies for integrating social data into marketing functions like customer analysis and service, and it has eyes for social-media style enterprise collaboration. But it doesn’t have much history working with advertising agencies or the advertisers directly.

Buddy Media, Salesforce’s biggest-ever acquisition, adds heft to Salesforce’s social media monitoring tools from Radian6. Salesforce has similar ambitions to Oracle’s, and similar expertise. Buddy Media CEO Michael Lazerow says his company needed to ramp up its own sales force to grow faster. But it’s pretty clear from this interview that Salesforce has had to add personnel that know how to sell into unfamiliar marketing functions. That’s not a condemnation, but a sign that it recognizes there are different customers for social media advertising tech.

Meanwhile, on the advertising side

Google might have been looking at Buddy Media, too. Google, and other big companies like Adobe and Microsoft, have more experience in selling services for advertising and web publishing. A truism of social media and content marketing is that advertisers are now publishers. Adobe announced Adobe Social in March, which will in theory unite a suite of social media management tools from its Efficient Frontier/Context Optional acquisition with social analytics.

But there are good reasons to believe the social media ad ecosystem won’t consolidate to a handful of big players. Sure, just as in the overly complex online display advertising space, there’s a case to be made for knitting together companies to provide a simpler, easier to manage solution for buyers or sellers. But there is also a need to maintain natural, healthy adversarial roles between marketing buyers, sellers, and “counters.” Otherwise, you have conflicts of interest – the fox guarding the henhouse. That’s why Shoutlet might be able to stay independent and focus on brand advertisers and agencies, and why Unified Social took an investment from Advance Publications, the parent company of the Conde Nast magazine empire.

That same dynamic exists for data collection, with the additional twist of maintaining consumer privacy via aggregation and clearing-house functions. Advertisers will never completely trust data from the companies selling them ad inventory. The Nielsens and Experians – which bought Conversen in May – of the world can be arms sellers to both sides.

Question of the week

Who will be the winners in social CRM and marketing?

How vulnerable is Google? June 4, 2012

Posted by David Card in Uncategorized.
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Last week, Google received an ultimatum from the European Commission’s antitrust head. Simultaneously it re-introduced its vertical shopping search site as a pay-to-play program for merchants. Regardless of whether you think it is “evil” or not, Google has shown a lot of me-too products with lagging innovation. While it’s a mistake to characterize Google as a one-trick pony, it’s worth examining just how vulnerable Google may be in its core businesses.

There is no predicting how government regulations and lawsuits will turn out, but there’s no question Google faces a mess of them. Gigaom Pro analyst Greg Sterling thinks the EC may be bluffing a little, as it is offering Google a chance to accommodate or settle early, even as it threatens massive fines. Google has already made some changes to its controversial “Search and Your World” results page re-design that appeared to favor Google services in the name of personalization. There’s likely some more room for give and take, though Sterling’s probably right that Google will have to go to court over search neutrality. Meanwhile, Google probably won’t have much luck making Microsoft and Nokia look anti-competitive to European regulators. But at least Google appears to be winning its expensive battle with Oracle over Java copyrights and patents.

Google used to deride “paid inclusion,” whereby sites pay search engines to guarantee their content is indexed speedily. It denies that its revamped Shopping program constitutes paid inclusion, but Google is arguing semantics here. It is charging for listings, and it will show some of these listings on its mainstream search results page. Initial reactions from merchants and retailers are mixed. Some think the new program will offer better control and analytics, but no one knows what will happen to between Google Shopping and SEM, or how conversion rates might be affected.

Signs of desperation?

Is Google franticly searching for new revenues? Is that why it is replacing a free service with a paid one for the first time, and why it seems vulnerable to antitrust charges? Its core businesses seem safe, with spots of accelerating growth:

Google is trying to charge for some platform services – but API fees for Maps may chase developers to alternative suppliers. Likewise, much of Google’s Android success is based on its open source model. There’s pressure on search click-through volumes and pricing coming from mobile. Google says web search is increasing, but is cagey about sharing actual numbers. While it’s safe to assume mobile activity is additive to web activity now, that’s a condition that could change in 24 to 36 months. And mobile’s where the growth is. Google’s core businesses are pretty secure, but it needs to tap into new budgets to accelerate growth: brand advertisers are a better fit for its sales force than enterprise IT departments.

Question of the week

Where will Google find growth?